Regression: Sea Freight confidence becalmed after a strong start to the year

March 24th, Bath, UK: The Logistics Confidence Index has noted its first dip of 2017, though a marginal month-on-month decline of 0.6 points means that confidence is still comfortably above the neutral mark of 50.0.

The results were heavily influenced by a 2.4 point decline in the Present Situation Index for Sea Freight. One possible factor behind this change is the backhaul capacity crunch which occurred this month on West-East routes between Northern Europe and Asia.

At the start of this month, The Loadstar reported that “freight rates have soared”, with Maersk Line having admitted to the publication in February that “exceptionally high demand” had caused “potential issues with the acceptance of bookings to our customers”. Conditions in Sea Freight Expectations were up by just 0.3 points month-on-month.

The March Air Freight Index result shifted only marginally against the February result, down 0.1 points to 52.4. This movement was due to a decline in Air Freight Expectations, whilst the Present Situation Index for Air Freight continued its consistent trend of improvement.

IATA data shows an improvement in load factors during January as a result of year-on-year rise of 6.9% in freight tonne kilometers (FTKs), whilst available capacity (AFTKs) rose by only 3.5%.








Air Freight

The Air Freight Index registered a month-on-month decline of 0.1 points to 52.4 for March 2017. Whilst this score reflected a year-on-year improvement of 3.8 points, it was 5.5 points below the March 2015 total.

The Air Freight Logistics Situation Index noted a month-on-month improvement of 0.8 points to 51.5. Month-on-month changes were driven by positive performance in outbound trades from Europe, whilst inbound lanes declined. The Europe to US lane rose by 4.2 points to 48.9, whilst the Europe to Asia lane increased by 3.0 points to 53.4. Meanwhile, Asia to Europe declined by 2.6 points to 56.5, as US to Europe lost 1.7 points to total 46.1.

By contrast, none of the four lanes surveyed in the Air Freight Logistics Expectation Index displayed a month-on-month improvement. Europe to US was unchanged at 52.4 points, with Asia to Europe contracting 0.6 points to 58.7. These results moderated the declines of the US to Europe and Europe to Asia lanes, which declined by 1.0 points to 49.9, and 2.6 points to 51.4, respectively. The Logistics Expectations Index recorded an overall month-on-month contraction of 1.0 points to 53.3 as a result.








Sea Freight

The Sea Freight Logistics Confidence Index recorded an overall score of 55.6, falling by 1.0 points against the previous month’s score. The result was 10.3 points greater than the score registered in March 2016, though 1.1 points below that recorded in March 2015.

Standing at 52.9, the Sea Freight Logistics Situation Index contracted by 2.4 points against the previous month. This decline was the result of falling confidence on each of the four lanes surveyed, and brought an end to the consecutive month-on-month improvements that had been recorded since November. US to Europe noted the greatest shift, with a fall of 3.9 points to total 46.0. Meanwhile, Europe to Asia fell by 2.6 points to 49.9, and Asia to Europe lost 2.4 points to 62.9. Europe to US declined by 0.9 points, amounting to 50.7.

The Sea Freight Logistics Expectations Index increased by 0.31 points, totaling 58.2 for the month. However, this average increase masks the fact that three of the four lanes declined, with exceptional growth of 4.9 points on the Asia to Europe lane (which totaled 67.5 points) offsetting the overall trend. Europe to Asia recorded a decline of 2.1 points to 56.0, whilst US to Europe fell by 1.9 points to 50.9. Meanwhile, Europe to US lost 0.4 points, amounting to 54.9.









One-Off Question

For this month’s one-off question, respondents were made aware of a 2016 Freightos ‘mystery shopper’ study which concluded that only one of the top 20 global forwarders was able to provide instant, online freight quotes. The question asked: “Over the next five years, do you believe that the freight forwarding sector will embrace digitisation?”

The responses were optimistic, with almost 90% of participants concluding that some kind of improvement will occur. Significantly, 25.0% of the respondents anticipated that the number of forwarders embracing digitisation will dramatically increase, though a much greater number (63.2%) foresee a “steady increase”. A minority of 10% predicted that the situation will be broadly the same as what it is now; mostly talk and little action. The remaining 1.5% of respondents were undecided.









Notes to Editors

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Key Contact

David Buckby, Economist, [email protected]